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LOL... of course it does.
Let's see... they are just kinda nonchalantly mentioning about a 20% increase then a 1000:1 swap to a new currency, which has happened about 70 times in recent history or.....
they are nonchalantly mentioning a 120,000% increase that will instantly make 100s of thousands of instant millionaires around the world, which has never happened before.
And of course there are the murmurous articles that interpreted this previously as a lop compared to the zero articles interpreting it as instant millions.
I guess you right Heavy... what was I thinking?
Don't worry... it's just the opinion of multiple economists.
Lop talk... Economists see 3 zero lop soon.
"Some economists are confident the deletion of three zeroes soon ... "
http://translate.google.com/translate?hl=en&sl=ar&u=http://www.bintjbeil.org/index.php%3Fshow%3Dnews%26action%3Darticle%26id%3D7225&sa=X&oi=translate&resnum=4&ct=result&prev=/search%3Fq%3D%25D8%25A7%25D9%2584%25D8%25AF%25D9%258A%25D9%2586%25D8%25A7%25D8%25B1%2B%25D8%25A7%25D9%2584%25D8%25B9%25D8%25B1%25D8%25A7%25D9%2582%25D9%258A%26start%3D10%26hl%3Den%26lr%3D%26sa%3DN%26as_qdr%3Dd
Please post a link that shows where the circulated dinar has dropped. I have shown you the CBI link that shows the circulation amount has steadily grown for 4 years and you continue to ignore it and post that it has been reduced.
Did you miss this part of the post "to fund the budget"
In other words... the dinar that is taken out of circ is used to run the government. It is put right back into circulation via Gov. spending.
Currency in circulation has not been reduced. If you would look at the central bank finacials you would see that the number has grown steadily from the beginning. Only a couple times over the last 4 years has the number gone down from month to month and it was insignificant when it did happen.
It would be nice if you would stop posting what appears to be a lie, or either post a link to back up your claim.
Line 64... currency outside of banks. That is currency in circulation.
http://www.cbiraq.org/key%20financial.xls
Dinar speculation...
http://www.atimes.com/atimes/Middle_East/FF17Ak01.html
"Many people sold anything they could to buy Iraqi dinars," Mohammed al-Abyad, chairman of the Egyptian Foreign Exchange Association told IPS. "
“Many foreigners in Iraq are also buying up dinars in the hope that it will recover strongly.”
http://www.latimes.com/business/la-fi-dinar11dec11,0,771392.story?coll=la-headlines-business&tra...
Alhajji says he watched teenagers in Jordan and Saudi Arabia respond to the e-mail, buying up the currency.
"They seriously think they can gain money by buying Iraqi dinars. This has become like a fever over there,"
“At Dinar Trade in Brentwood, Tenn. (formerly Bakersfield), sales dropped off during the last few months but picked up again in the last two weeks as many of its 54,000 customers took a renewed interest in the dinar, an employee said.”
http://www.irinnews.org/report.aspx?reportid=22824
“small-time Pakistani investors and even ordinary people are flocking to currency dealers to buy the new Iraqi dinar”
“ reports of large-scale smuggling to several Gulf states as well as to South Asia”
http://www.newsline.com.pk/NewsFeb2004/economy2feb2004.htm
“The daily trading volume of Iraqi currency is still enormous as compared to other currencies.”
http://www.iraqidinars.org/158/iraqi-dinar-purchases-approved-by-israel/
“Despite Trading with the Enemy Act prohibiting trade in enemy currency, finance minister approves trade in Iraqi dinar for another year.”
If Iraq and the CBI are trying to keep speculation down… they are doing a terrible job at it.
Iraqi incomes.. As reported here by the BBC….
http://peacefuljustice.caltech.edu/2003-10/5.shtml
“Average income in Iraq fell from $3,600 per person in 1980 to between $770 and $1,020 by 2001 and will be just $450-610 by the end of 2003, the UN and World Bank said”.
That was in 2003. Average incomes have risen back towards $3000 per year in Iraq.
Iraqis have never had a high income.
When someone tells you Iraqs are upset becuse the exchnage rate dropped and they don't make any money now... that's a lie.
A few old articles, some might have missed them.
http://www.iraqdevelopmentprogram.org/idp/news/new1297.htm
Iraq is considering redenominating the dinar, printing new banknotes to remove inflation-generated zeros from its currency, the finance minister said yesterday. Senior government and central bank officials have said the proposal has been under consideration for some time to make one new dinar equal to 1,000 current dinars, a move that would bring the currency closer to parity with the US dollar.
http://www.iraqdirectory.com/DisplayNews.aspx?id=2045
Later, this suggestion turned out to be the removal of three zeros from right side of the figure; thus ( 5.000.000) five million I.D. will be ( 5.000 ) five thousand I.D. many saw great good in this procedure but it is necessary to explain it scientifically.
http://www.edinarfinancial.net/news/?quer=&nm=&ny=&nn=320
A statement by B.J. AL Zubaidi, the Minister of Finance, in which he said that he had suggested to the Chairman of the Central Bank, Dr. Sinan AL Shibibi, that three zeros be taken from the Iraqi Dinar in order to raise its value so that one Dinar be equal to a Dollar.
CEO of Al-Warka Bank Mr. Saad al-Bunnia
http://www.americancontractor.com...contractor_email_inte_1.html#more
“My advise to those Iraqi dinar speculators is that they are taking the risk of by buying Iraqi dinar because I really do believe that the currency will be changed in the near future once the government is stabilized “
Brigadier General Hugh Tant, who was in charge of the exchange.
(http://www.usip.org/library/oh/sops/iraq/sec/tant.pdf).
TANT: You had the Central Bank which answered, of course, to Saddam. And whenever he directed, they had to print more money, which was a negative inflationary monetary policy. That was one of the reasons why the currency had to be replaced.
But, in the great majority of the country, they had the Saddam dinar with Saddam's face on it. There were basically only two denominations of that: there was a 10,000-dinar note, which was worth about $5, and there was a 250-dinar note, which was worth about 12.5 cents, 12 cents. The reason its value had dropped so low was because of Saddam’s inflationary monetary policy. In comparison, back in the '80s, before the Saddam dinar came about, the rate of exchange was about $3 to one dinar. But because of Saddam there was now a total upside-down situation where one dollar was worth about 2,300 dinar.
This great rate everyone quotes... it never even applied to the Saddam Dinars. It was prior to the Saddam Dinars ever existing that the Swiss dinars were worth $3. The Trillions of Saddam dinars were just dumped right on top of the swiss dinars.
True value of the dinar pre war.
(http://www.export.gov/iraq/pdf/crs_iraq_economy.pdf).
“This report was originally prepared at the request of the Senate Committee on
Foreign Relations. With the Committee's permission, it is being made generally
available for the use of Members.”
Currency and the Balance of Payments: The Iraqi dinar was long considered a strong currency aided by oil revenues and rising foreign exchange reserves. Some of this reputation may be attributable to the decision, by the National Bank of Iraq in the 1950’s, to maintain 100% reserves behind outstanding domestic currency.30 The official rate was variously set between $3 per dinar to $3.38 per dinar in the 1970s, the last official rate of $3.11 per dinar was set in 1982. During the 1970s, the official and markets rates generally corresponded and by 1980 the country had $35 billion in foreign exchange reserves. By 1987, that figure had fallen to $2 billion. The currency depreciated steadily during the Iran-Iraq war, and the pace of descent quickened after the first Gulf war. One estimate had the currency depreciate from 4 to 8 dinars per dollar in 1990-91. The advent of sanctions paradoxically stabilized the currency for a brief time as foreign exchange transactions virtually ceased. However, the onset of limited food and medicine trade under sanctions renewed the downward slide. The dinar reached an all-time low of 2,660 per dollar in December 1995. It has slowly appreciated from that low, yet has fluctuated widely from 1,000 to 2,300 dinars per dollar in the period 1997-2001 on the black market.
Inflation: As with other indicators, data on inflation are spotty and, during the 1990s, price data have a highly anecdotal quality. Before the oil boom, the Iraqi economy was characterized by price stability with an inflation rate at 5-6% during the period 1960-73.34 This source calculates inflation increasing from 18% to 68% between 1975-79 as a consequence of substantial currency inflows related to the oil boom.35 Prices continued to rise during the Iran-Iraq war as resources were diverted toward the military and government borrowing from the central bank expanded the monetary base. Inflation was recorded at 95% in 1980 and had increased to 400% by 1989. During the 1990s, a period of hyperinflation occurred. The government continued to print money to meet expenditures while economic sanctions shut off the supply of imported goods leading to a classical monetary overhang. A yearly inflation rate of upwards of 2,000% per cent was reported in open market food prices between 1990-1991.36 Another source estimated that inflation increased 5,000% between 1990and 1995.
March currency numbers from the CBI
15.1 Trillion dinars in Circulation.
10.8 Trillion in deposits.
For a total of 25.9 Trillion M2.
http://www.cbiraq.org/key%20financial.xls
Billions in debt reduction
tripling of oil prices
inflation down
dinar moving like a snail... why?
lol... pumpers... never.
It as a known fact that certain dinar forums pay certain posters to post to boost traffic. More hits, more money. I've seen the private message exchange that proves it.
It is also a known fact that certain dinar dealers pay certain forum owners for referrals. I saw the post from a forum owner that admitted it.
Paid forum owners.
Paid posters.
But yet... if you dare claim someone is a pumper you will be crucified
Ddos Is Not Going To Stop!...
Posted by DDos Daddy at rolclub. Might be the guy... might just be a crackpot taking credit for it. Who knows.
--------------------------------------------------------------------------------
Hello all I am frankly laughing you think its done by the GOV. If they wanted you to shut down, your domain names would be suspended the sec they contacted the registrars you registered with. Why would they do anything like that? I have been kicking all forums, and several dinar dealers site's @*s.. Reason for doing this is that these site's are all making poor people invest in this dinar scam. I have a cousin that spent his life savings newly in iraqi dinar. When is mom became sick he could not even cash that money back again fast enough for her operation.. I think i ddos all for a good reason, to save more from getting scammed by this scam investment.. I have been DDosing Rolclub, NNP, InvestorsIraq, DinarDis, and several other sites.. The smaller i let go for now. Do you think this will get any better? NOPE i am fully dedicated to bring you all down, and down you will stay. YOU LURE THE PEOPLE INTO INVESTING IN IRAQI DINAR SCAM FOR YOUR PERSONAL GAINS. I come here as all the other forums i am ddosing are down. This is the only one i am ddoing that is up. WOW, you must have a solid protection. So what will you do when i am done with my new bot net in a few days with 110 GB power? Is there any Ddos protection that can protect Rolclub from it? The other forums fell like a rock. They will stay there. I guess i am here because i want to discuss this matter now in a int.way with the admin's of all forums that are down.. If you ban me, i will keep ddosing you to the end of my days... Think about it. DDOS DADDY.
Thanks Matt. Just re-read my post and I made a mistake in the top line. As per the articles from Rasica and also from the link for the Central Bank of Kuwait... Kuwait has 20 billion for total money supply. Not trillion as I posted... 20 billion.
The currency in circulation is 799 million... not billion and certainly not trillion. That is a shockingly low number when compared to Iraqs over 10 trillion. I discovered that a couple years ago when researching the true story about what happened when Iraq invaded Kuwait... Kuwait had less than 400 million dinars in circulation when Iraq invaded.
Interesting... not surprised at all though.
This was posted by the guy who owns/runs rolclub...
I am sure NNP can afford a better solution then they have now. Dinar Trader gives them a handsome amount each month for ref.clients to them, and then he also runs ads on his forum.
Admin
These articles prove that I was right. The 20 trillion number is Kuwait's total money supply, it is not the currency in circulation number as you claim. The currency in circulation is less than 1 billion.
The article even mentions the 15 billion figure that I was using, because that's when I looked it up, two years ago.
So you are posting these articles talking about how Kuwait has a 20 billion money supply. And it states that an increasing money supply is inflationary. Inflation means that the money will lose value.
Now put those simple facts together and then look across the boarder to Iraq where they have a money supply of 25 trillion. They have the same size economy. It is painfully obvious why Iraq's currency is valued where it is. 25 trillion compared to 20 billion with the same size economy is a massive differenceand is a perfect explanation of why there is a massive difference in currency value.
That was your question and why we started talking about this. Your articles give the exact reason. Thank you. :)
Before you respond with Iraq making 70 billion this year and buying all that currency back... understand that will never happen. Their goal is to de-dollarize. Buying all their currency back would be the exact opposite of that. Also... I'm sure you are aware of the currency auctions they have now... they already are using that 70 billion a year to buy back their currency, but they have to put it right back into the economy via government spending.
M3 is NOT just circulated dinars. M3 consist of circulated dinars, electronic money, and everything.
Please read this from the Central Bank of Kuwait...
http://www.cbk.gov.kw/WWW/index.html
Money Supply in its Broader Definition (M3):
Includes money supply in its broad definition (M2), plus private sector deposits with deposit-accepting investment companies.
Money Supply in its Broad Definition (M2):
Money (M1) + quasi-money.
Quasi-money:
Savings deposits (in KD) + time deposits (in KD) + foreign currency deposits + CD’s (in KD). The private sector maintains quasi-money components with local banks.
M3 includes it all
I don't understand???
You are kidding right???
Do you really believe those are the number of bills put into circulation every month?
Those are running numbers for total currency in circulation.
You are blatantly wrong again.
Here is the link...
http://www.cbk.gov.kw/cbkweb/servlet/cbkmain?Action=mtbl&archive=200804&tbl=RM02
Currency issued... 799 million.
Total money supply 20 billion.
I had looked the numbers up years ago, so I'm not surprised my numbers were a little low.
Iraq will not spend all their revenues buying back currency... that is simply preposterous.
Even if they were to try... which they will not.
There is an estimated 4 or 5 TRILLION in the hands of speculators. Will you sell yours back at this rate.
Just for kicks. Let's compare Kuwait to SA.
SA's money supply is 35 times more than Kuwait.
Take Kuwait's $3.75 and divide by 35 and then multiply by 4 for the 4 times bigger GDP and you get $.43. Not that far from what SA's rate really is.
These are not exact numbers because there is no exact formula. But the rates will not fall that far away from this formula.
It's crystal clear why Kuwait and Saudi Arabia's rate are where they are.
Kuwait has a money supply of 16 Billion... that is 1625 times less than Iraq.
The last time I checked Kuwait only had about 500 million... yes MILLION dinars in circulation. That is 20,000 times less than Iraqs. They have about the same GDP.
Take Kuwait's $3.75 and divide by 1625= $.0023. Not far off.
Saudi Arabia has a money supply of $570 billion... that is about 50 times less than Iraq.
They also have a GDP about 4 times more than Iraq.
Take SA's rate of .26... divide by 50, then divide again by 4 for the 4 times larger GDP and you get .0013. Very close again.
These numbers are not a coincidence.
I swear... I'm innocent... LOL
What is going on? Neno's and IIF are both down from attack. Rolclub is accessible but they also claim to be under attack. Someone has a grudge or something against the Dinar sites.
So... they are saying that the increases in the exchange rate were to fight inflation.
Sounds true and seems to be backed by the fact that as inflation has been lowered the increases in the exchange rate have been slower and slower.
So low inflation means little to no movement in the rate.
The figures in that post are the M2 figures reported by every one of those countries. If Iraq's numbers are somehow incorrect because of "debt created money"... which is total nonsense... but if it were true it would also apply to all those other countries as well. In fact since those countries currencies have been out longer, they would probably have a larger percentage of this "debt currency" so it would make the comparison even WORSE for Iraq if you want to use that argument.
Those figures show that without a doubt, there will be no large revalue for the dinar.
Money Supply to GDP ratio.
Some of my best work
I compared money supply(converted to $s) to GDP.
(high value currencies)
Kuwait has a money supply that is 106% of it's GDP
Malta is 125%
Bahrain 64%
Oman 154%
UK 36%
Latvia 30%
Jordan 68%
USA 55%
(low valued currencies)
Korea 163%
Mongolia 17%
Tanzania 8%
Columbia 16%
Belarus 10%
Venezuela 41%
Indonesia 15%
Iran 17%
Vietnam 20%
Saudi Arabia is 41%
Iraq is currently about 20%... which is pretty much right in line with all these other countries.
If they were to revalue to 1:1 their money supply to GDP ratio would be 21600%. That would put them slightly out of line with the rest of the world.
Even 30 cents per dinar would leave them with a ratio of about 8700%... still a bit out of whack.
If they went to 200%, which is still higher than any other country on the list. The rate would still be less than a penny... about .7 cents per dinar or .007
A 100% ratio would be about .3 cents per dinar or .003
You say we... do you work for HS Dent or do you just cut and past right out off their newsletters as I suspect? Do they know you are sharing on a public forum?
If the dinar is backed by oil, then why has the dinar barely moved as the price of oil has exploded?
The reason... The dinar is not backed by oil... that is a flat out falsehood.
The dinar... just like every other pegged currency in the world is backed by foreign currency reserves.
As far as the Gov using all of their revenues to buy back the currency... that is so laughable it doesn't even need a response.
Latest CBI financial numbers.
M2 is 25.914 Trillion
currency outside banks 15.112 Trillion
deposit component 10.802 Trillion
Understanding why commodity prices have skyrocketed.
http://seekingalpha.com/article/78264-commodities-prices-speculation-exposed
That was a nice dip yesterday!
We were so well covered that we spent the day in member chat discussing World Hunger as we ho-hummed the sell-off, but we did get a little bullish towards the end of the day and started picking off some callers, looking for at least a bounce in the morning but willing to roll down or add to some of our stronger long positions.
The most exciting thing that happened Tuesday was the testimony of Michael Masters to the Senate Committee on Homeland Security (who have sweeping powers) as he spilled the beans and gave the Senate a very detailed inside view of exactly how speculators are the primary cause of high commodity prices.
Don't look for any commentary on this in the WSJ or most media outlets, you would think this entire investigation isn't going on as you watch CNBC wearing their Oil $130 party hats this evening!
What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors. Specifically, these are Corporate and Government Pension Funds, Sovereign Wealth Funds, University Endowments and other Institutional Investors. Collectively, these investors now account on average for a larger share of outstanding commodities futures contracts than any other market participant.
With very bold categories in his presentation like "Index Speculator Demand is Driving Prices Higher" Masters lays out a simple and compelling case that illustrates how over $250Bn of speculative money has poured into the commodities markets since 2003, driving the average cost of commodities indexed up 183% WITHOUT ANY SIGNIFICANT INCREASE IN ACTUAL DEMAND.
It's not just oil, there is a chart on page 4 of his presentation that shows how on Jan 1st 2003 sugar futures stockpiled totaled 2.3Bn pounds. On March 12th of this year, speculators had stockpiled 48Bn pounds of sugar. Soybean oil went from 163M pounds to 4.5Bn pounds, corn from 242M bushels to 2.4Bn bushels, coffee from 195M pounds to 2.4Bn pounds. wheat from 166M bushels to 1.1Bn bushels. Even cattle and hogs have had 10-fold increases in speculation. This is your "demand," 10 month supplies of commodities removed from the markets over 5 years and held by speculators who point to the "demand" as evidence of a tight supply - A TOTAL CROCK!
Speculators "consumed" as much additional oil as China in the past 5 years (848M barrels) while gasoline stockpiles have risen from 1.1Bn gallons to 3.5Bn gallons and natural gas stored by speculators has gone up from 331M BTUs to an insane 2.3 Billion BTUs. Aluminum - 10x, Nickel - 5x, Zinc - 10x, Copper - 7x, Gold - 10x, Silver - 15x — Madness!
In fact, Index Speculators have now stockpiled, via the futures market, the equivalent of 1.1 billion barrels of petroleum, effectively adding eight times as much oil to their own stockpile as the United States has added to the Strategic Petroleum Reserve over the last five years.
Demand for futures contracts can only come from two sources: Physical Commodity Consumers and Speculators. Speculators include the Traditional Speculators who have always existed in the market, as well as Index speculators. Five years ago, Index Speculators were a tiny fraction of the commodities futures markets. Today, in many commodities futures markets, they are the single largest force. The huge growth in their demand has gone virtually undetected by classically-trained economists who almost never analyze demand in futures markets.
I urge you to set aside the time to read this full report, it is an excellent presentation of pretty much everything I've been "ranting" about for 2 years put together by a guy who trades commodities for a living and is, as I am, totally fed up with the destruction of our economy and the suffering that is being caused by this rampant commodity speculation. In order for Goldman Sacks to make $1Bn, every driver on Earth needs to pay another $1 per gallon for gas this year - is that an efficient market? If all 2Bn of us just send GS a check for .50, THAT would be efficient. Unfortunately, as we discussed last week, Goldman's partners in crime who got together and formed the ICE back in 2003 (when all this started) also want their Billions - no matter what it costs you.
One particularly troubling aspect of Index Speculator demand is that it actually increases the more prices increase. This explains the accelerating rate at which commodity futures prices (and actual commodity prices) are increasing. Rising prices attract more Index Speculators, whose tendency is to increase their allocation as prices rise. So their profit-motivated demand for futures is the inverse of what you would expect from price-sensitive consumer behavior.
When Congress passed the Commodity Exchange Act in 1936, they did so with the understanding that speculators should not be allowed to dominate the commodities futures markets. Unfortunately, the CFTC has taken deliberate steps to allow certain speculators virtually unlimited access to the commodities futures markets.
Masters closes with the key issue, that:
The CFTC has granted Wall Street banks an exemption from speculative position limits when these banks hedge over-the-counter swaps transactions. This has effectively opened a loophole for unlimited speculation. When Index Speculators enter into commodity index swaps, which 85-90% of them do, they face no speculative position limits.
The really shocking thing about the Swaps Loophole is that Speculators of all stripes can use it to access the futures markets. So if a hedge fund wants a $500 million position in Wheat, which is way beyond position limits, they can enter into swap with aWall Street bank and then the bank buys $500 million worth of Wheat futures. In the CFTC's classification scheme all Speculators accessing the futures markets through the Swaps Loophole are categorized as "Commercial" rather than "Non-Commercial." The result is a gross distortion in data that effectively hides the full impact of Index Speculation.
Additionally, the CFTC has recently proposed that Index Speculators be exempt from all position limits, thereby throwing the door open for unlimited Index Speculator "investment." The CFTC has even gone so far as to issue press releases on their website touting studies they commissioned showing that commodities futures make good additions to Institutional Investors' portfolios.
This is how the current administration, through the "Enron Loophole" and other directives to the CTFC, has perverted an organization that is supposed to be CONTROLLING speculation and turned them into more than an enabler, but an actual cheerleader for the commodity markets. You would think this would be news but the same people who are sucking over $2Tn a year out of our pockets (over and above what we paid for the same commodities 5 years ago) are also the people who control the mainstream media and the very government that is listening to this testimony.
In order to put a stop to this YOU have to act. YOU have to get mad, YOU have to tell people what is happening because no one else is doing it are they? Feel free to copy this, Email it, print flyers - whatever - this is something that needs to be talked about and what better time than the day oil hits $130 a barrel while you drive less than you did last year, when it was $51.03 in January!
The CBI is not holding the rate down.
I'm not sure how you could possibly come to that conclusion. Under the current plan, maybe the rate could go up a little more... but that is only because the CBI is buying back billions and billions of dinar to fund their budget. If they were not buying it back and just putting out new currency for the budget the rate would be going the other way.
If you think that's not the case... maybe you'll believe the words of the CEO of Warka Bank.
http://www.americancontractor.com/2007/05/american_contractor_email_inte_1.html
"If it was not for the daily intervention of the central bank of Iraq in selling in the range of 500 million dollars per month, one would expect the exchange rate to reach as high level as 5000 dinars to the one dollar."
Selling dollars is the same as buying dinars.
He also made this statement.
"My advise to those Iraqi dinar speculators is that they are taking the risk of by buying Iraqi dinar because I really do believe that the currency will be changed in the near future once the government is stabilized and settled"
Remember also that when Iraq invaded Kuwait they had an M2 figure of less than 24 Billion.
From the Central Bank of Iraq.
http://www.cbiraq.org/Binder4.pdf
Year.........M2............Exchange Rate ID/US$
91.............24.6B.......10
92.............43.9B.......21
93.............86.4B.......74
94.............238.9B......458
..................
As of today the CBI reports 25 Trillion for M2.
http://www.cbiraq.org/key%20financial.xls
So they have 1000 times more money to support now then they did then. The OBVIOUS main reason their currency is about 1000 times more worthless today.
That is not what that article says.
It says they HAVE BEEN changing the real exchange rate.
He is saying that due to the CBI tightening the monetary and changing the exchange rate as they have been lately, it has resulted in a budget deficit.
He was also complaining in the article about the CBI spending millions of Dollars at the auctions.
Here's what's happening that he's unhappy with. Iraq makes money by selling oil. They get dollars for the oil. They then use those dollars to buy back dinar to fund the budget. Well.. as they have changed the exchanged rate, their oil dollars buy back LESS dinar now, so they have to spend more dollars to buy back the same amount of dinars. That's causing the budget shortage he is referring to.
The other complaint he makes about the tight monetary policy is it's effect on the economy. A tight monetary policy makes it harder to get money. It is encouraging the banks to just deposit their money with the CBI for the high interest rates. That means they are not loaning it out. No loans, no investing in public sector, that's not good for the Iraqi economy and that's what he's pointing out.
This is not a good article. This guy , the experts, want Iraq to adopt a looser monetary policy, let the banks start loaning money and sounds like he wouldn't mind seeing the exchange rate go back up to 1300, 1400 or maybe higher.
I am amazed at some have interpreted this.
You're right... I do ask for links or something to back up the numbers when people post what I know and can prove with links as being nonsense.
I can't provide a link to the article for reasons you'd understand if you searched for the site.
It seems legit. This is not the Iraqi government speaking. It's an internet financial site that specializes in emerging markets.
Business Monitor International
Business Monitor International
Emerging Markets Monitor (EMM) is a weekly financial newsletter, providing analysis, market intelligence and specific forecasts on global emerging markets.
Gradual Appreciation Expected As Anti-Inflationary Tool
May 2008 | Currency Forecast
BMI IRAQ CURRENCY FORECASTS
Short-Term Outlook
We expect the Central Bank of Iraq (CBI) to maintain its strategy of allowing gradual appreciation of the dinar, while keeping interest rates generally stable, in order to ensure inflation remains well below the double-digit levels seen during 2007. Indeed this policy has already proved extremely effective at curbing inflation, which came in around 5.6% y-o-y in March down from 36.6% y-o-y in March 2007 although continued fiscal restraint and a swift hike in interest rates also contributed to slowing inflation. However, currency appreciation remains the CBI's principal anti-inflationary policy instrument and we therefore expect the dinar to appreciate around 2% over the rest of this year to hit IQD 1,180/US$ by end-08 and around 7% in 2009 to hit IQD 1,100/US$ by the end of the year.
Core View
With inflation now well below the level it was at during 2007 - the CPI averaged 5.0% y-o-y over Q108 compared to 46.7% in Q107 - the government has tentatively started to cut rates. The policy rate was cut to 19% in February and then to 17% in March. However, we see these adjustments in interest rates as minor changes designed to back up the CBI's exchange rate policy, and not the primary instrument of the CBI's monetary strategy. Indeed with the economy still primarily cash-based, more weight is being given to the CBI's currency policy and with the banking system still recovering from 2003's US-led invasion and subsequent war, interest rate movements remain relatively impotent in the current economic climate.
However, other macroeconomic factors will to help drive the dinar's appreciation over the coming years. Indeed with oil prices currently at record highs and Iraq's oil production continuing to creep higher, the government has been able to amass reserves suggesting upside pressure on the dinar. Reserves grew by almost 70% in 2007 to hit estimated US$31.4bn and we expect foreign reserves to rise to US$32.9bn in 2010. A large part of this will be from oil revenues as we expect the oil price to stay high in the medium term - we are forecasting Brent crude to average US$100.00/bbl and US$85.00/bbl in 2008 and 2009 respectively - and Iraq's oil production to continue to push higher to hit 2.70bn b/d in 2010 up from an estimated 2.08bn b/d in 2007. On top of this strong real GDP growth - which we expect to average 8.5% over the next five years - and increasing foreign investment as the security situation improves will also support dinar strength.
In light of the success of the inflation-targeting overall strategy, Finance Minister Bayan Jabr has mooted (mooted... think about carefully; weigh) a possible rebasing of the dinar, however we think this is unlikely to happen over the coming years, as the crawling peg is continuing to serve the Iraqi economy well. In addition, in December 2007 rumours spread that the government was planning to rebase the currency and remove the last three zeros to achieve 1:1 parity with the dollar, something that the CBI quickly denied. The central bank said it was not currently considering such an option and the rumour had been spread by speculators wishing to take advantage of currency inflows. That said, the CBI remains committed to developing Iraq's currency regime and diversifying the range of policy instruments at its disposal. It has said that it will lend support to a liquid secondary market of tradable instruments by selling the treasury bills it receives from the Finance Ministry and a central depository system is also planned. Furthermore, by reforming the banking sector, it is expected that a secondary market will start to emerge over the time providing the CBI with another avenue within which to conduct market operations.
Risks To Outlook
The key risk to our outlook comes from a marked fall in oil prices, which would likely lead to slower dinar appreciation or currency weakness depending on the extent of the drop. Indeed a significant slowdown in the US and other developed countries could dampen global demand for oil, which would feed into lower oil revenues and slower growth (although this is far from our core scenario). Alternatively, an escalation of violence or sectarian clashes could lead to a crisis of confidence in the currency, which remains another risk to the downside. That said, we expect the price of oil to stay high over the medium term, given strong demand from emerging markets, and with coalition forces pledging to stay in Iraq until they have 'finished the job', we are hopeful that Iraq can avoid a return to the widespread violence seen in previous years.
Finally... something written in real english.
Do you understand what he, the experts, are saying? This is not a good thing.
He is saying that due to the CBI tightening the monetary and changing the exchange rate as they have been lately, it has resulted in a budget deficit.
He was also complaining in the article about the CBI spending millions of Dollars at the auctions.
Here's what's happening that he's unhappy with. Iraq makes money by selling oil. They get dollars for the oil. They then use those dollars to buy back dinar to fund the budget. Well.. as they have changed the exchanged rate, their oil dollars buy back LESS dinar now, so they have to spend more dollars to buy back the same amount of dinars. That's causing the budget shortage he is referring to.
The other complaint he makes about the tight monetary policy is it's effect on the economy. A tight monetary policy makes it harder to get money. It is encouraging the banks to just deposit their money with the CBI for the high interest rates. That means they are not loaning it out. No loans, no investing in public sector, that's not good for the Iraqi economy and that's what he's pointing out.
This is not a good article. This guy , the experts, want Iraq to adopt a looser monetary policy, let the banks start loaning money and sounds like he wouldn't mind seeing the exchange rate go back up to 1300, 1400 or maybe higher.
I am amazed at some have interpreted this.
It's really a silly moot argument. 30 million dinar will never be worth 30 million dollars.
You have to understand. If you can convince yourself, beyond all sound economics that the dinar can be 1:1, then it's not much of a leap to convince yourself that they can then grow to 1:2. Anything is possible in dinar fantasy land.
Not surprised... you fail to read/comprehend again....
http://www.embassyofkuwait.ca/Kwt/history/currency.htm
it is worth mentioning that during the Iraqi occupation of the State of Kuwait, among other items the Iraqi occupiers stole large sums of Third Issue of Kuwaiti Notes, that were never placed onto circulation until that time
The Third Issue of the Kuwaiti Currency was put onto circulation by the Central Bank of Kuwait on Wednesday, February 20, 1980
The law was from 1968... but nice try.
Fact... all the stolen Kuwaiti dinar was taken out when the new currency was introduced, which unlike what you claim, is the exact opposite as what Iraq did with the NID. Kuwait started and ended with the same amount of currency and lasted over a 7 month period.
Saddam increased the dinar from low billions into the trillions and they are still in the system. Going on 20 years now.
It couldn't be a more night and day comparison between Kuwait and Iraq.
You guys love to pull IIF posts over here. Why not take this post over there and see how they respond.
It blows the Kuwait comparison out of the water and over the moon.
Facts... DD...
it is worth mentioning that during the Iraqi occupation of the State of Kuwait, among other items the Iraqi occupiers stole large sums of Third Issue of Kuwaiti Notes, that were never placed onto circulation until that time , from the vaults of the Central Bank of Kuwait. In line with Law No. ( 2A/90 ), the Ministerial Decisions Nos. ( 1A/90 ) and ( 2A/90 ) were issued to determine the serial numbers of these currency bank-notes. Thus, the Central Bank of Kuwait will no way exchange these stolen currency notes
http://www.embassyofkuwait.ca/Kwt/history/currency.htm
The "official" rates were on par. The "real" rates were not.
You have to understand that there is a difference. The "official" rate is just a rate that the government picks and says "this is what our currency is worth. That's great, but how many hundreds of articles do you need to see that state Saddam was the only one who got that rate and it was not honored by anyone. The real rate in 91 was 10 dinars to the dollar. Big difference.
Not sure what your point was anyway. I never claimed what the Iraqi rate was at that time. I was talking about the Kuwaiti rate and their currency. Not surprised that you would read it and see something I wasn't talking about.